The Philippine president is determined to forge closer ties with China — but at what cost?

By Greg RushfordGreg Rushford, a specialist in international trade and
investment policy and politics, is the publisher of the Rushford Report.

October 17, 2016 - 4:14 pm

Since he took office on June 30, Philippine President Rodrigo Roa Duterte — also known as “Duterte Harry” — has earned international notoriety for a harsh anti-drug campaign that has led to the extrajudicial killings of more than 3,600 alleged traffickers around the country. The crackdown has alarmed the European Union, the United Nations, and the United States. At one point Duterte called Barack Obama “a son of a whore,” later telling the U.S. president “to go to hell” after Washington dared to criticize the murders. Sooner or later, Duterte has vowed, he will “break up with America,” the Philippines’ longstanding treaty ally and security guarantor.

There’s one international power that doesn’t seem particularly bothered by Duterte’s excesses. “The Chinese side fully understands and firmly supports the Duterte administration’s policy that [prioritizes] the fight against drug crimes,” said Chinese Ambassador to the Philippines Zhao Jianhua in a speech last month. He went on to express his satisfaction at the “friendly interactions’ between the two countries since the new president began his term, predicting that the sun “will shine beautifully on the new chapter of bilateral relations.”

In anything, the ambassador may have understated the matter. This week Duterte is set to meet Chinese President Xi Jinping in Beijing, where the two are planning to sign a range of high-level bilateral agreements that will dramatically boost trade and investment between the two countries. Nor is their new friendship restricted to business. The visit comes just days after Duterte declared an end to joint Philippine-American naval patrols in the strategically sensitive waters of the South China Sea, where China has been steadily expanding its presence despite rival claims by Manila and other countries. The 65-year alliance between the U.S. and the Philippines has never looked so fragile.

So why the shift in policy? On one level, Duterte’s desire to seek friendship with the Chinese reflects a willingness to appease Beijing’s aggressive stance in the disputed waters. Chinese Coast Guard warships armed with machine guns and water cannons have harassed Philippine fishermen, preventing them from earning their livelihoods in their traditional fishing grounds in the South China Sea (90 percent of which China claims as its own). Chinese dredges have been deployed well within the Philippines’ 200-nautical-mile exclusive economic zone, where they have destroyed irreplaceable coral reefs to build airstrips and naval bases aimed at enhancing Chinese offensive power. China has also forcibly prevented Filipinos from developing valuable oil, gas, and mineral resources that they’ll need in the coming years to power their electricity grid. “I will not go to war” over such matters, Duterte has declared.

On July 12, just short of two weeks into Duterte’s presidential term, an international tribunal in The Hague ruled that China has been acting in violation of Beijing’s sworn obligations under international maritime law. The litigation was brought in 2013 by Duterte’s predecessor, Benigno Aquino Jr., who sought to use the rule of law to rally international opinion to pressure the Chinese to respect Philippine sovereignty. Now Duterte appears to be signaling that he’s willing to overlook the tribunal’s findings if China is willing to do a deal.

There are various explanations for Duterte’s eagerness to seek a compromise. Some of those who know the president well suggest that the pivot is rooted in the left-of-center ideology he has professed in his past, which left him with a residual suspicion of the West (and Americans in particular). Duterte openly admires one of his former college professors, Jose Maria Sison — the founder of the Communist Party of the Philippines and its armed wing, the New People’s Army. Others point out that Duterte, who has several times threatened to declare martial law, has praised authoritarian leaders like former Philippine strongman Ferdinand Marcos. And besides China’s President Xi, Russia’s Vladimir Putin has been wooing the Philippine president with suggestions of cheap financing for Russian attack helicopters.

Meanwhile, Duterte and his foreign secretary, Perfecto Yasay, have been courting the support of business elites who favor closer relations with Beijing. In his career as a lawyer, Yasay represented the interests of Chinese-Filipino tycoons who have good connections in Beijing. Yasay, who brought no foreign policy experience to his position, has also been careful to speak respectfully of the Chinese — while telling an audience of Washington, D.C. insiders that Filipinos no longer want to be America’s “little brown brothers.”

Among Yasay’s prominent clients has been Lucio Tan, one of the country’s richest men, who Duterte has said was one of the first to urge him to seek the presidency. While little-known outside Asia, billionaire Tan — who was born in China’s Fujian province and is considered on the mainland to be a “patriotic” Chinese — is one of the most controversial figures in Philippine political circles. He was one of the original so-called “Marcos cronies,” who became rich thanks to the tax breaks and other government subsidies granted in the 1970s by Ferdinand Marcos.

After Marcos was deposed in 1986, a series of successive Philippine prosecutors sought unsuccessfully to recover Tan’s allegedly ill-gained wealth. Today, he is chairman of Philippine Airlines, the country’s flagship carrier, and has extensive holdings in banking, mining, tobacco, beer, hotels and property development. He’s also made some major investments in China, which have clearly earned him the goodwill of Beijing. When Chinese presidents come to Manila, they always stay in one of Tan’s hotels.

Though there’s no evidence that Duterte is financially beholden to Tan — the president says he turned down the tycoon’s offer of cash and the use of aircraft during the campaign — they share a strong interest in closer ties with the Chinese. During his campaign, Duterte received an especially warm welcome from the Federation of Filipino-Chinese Chambers of Commerce and Industry, of which Tan is an honorary chairman. Along with the Chinese ambassador, Tan was one of the first prominent visitors Duterte received after his election victory.

In his eagerness to establish close economic ties with Beijing, Duterte has also said he is looking to revive various Chinese-Philippine joint ventures that were envisioned a decade ago during the presidency of Gloria Arroyo. The most notable project on Arroyo’s watch involved a $329 million telecommunications contract with China’s state-owned ZTE Corp. But Arroyo’s hopes to forge closer economic ties with China were derailed by various allegations of pay-offs that involved ZTE, Arroyo herself, and members of her entourage. Authorities in Manila recently dropped graft charges against Arroyo and her former colleagues, and her four-year house arrest has been lifted. Duterte has insisted that he had nothing to do with those decisions, though he had publicly offered to pardon Arroyo, in any case.

While no corruption allegations have surfaced in the new Duterte administration, the concerns about the adverse consequences of doing business with China remain. As Philippine professor Aileen Baviera has observed, the ZTE deal “was an example of how Chinese wealth … can undermine already weak institutions and government norms in a recipient country.”

While some members of the Manila elite worry that Duterte’s campaign of extrajudicial killings threatens to corrode the hard-won rule of law, Filipino-Chinese businessmen are among the most vocal defenders of the president’s drug war. And a tycoon from mainland China, Huang Rulun, who first acquired his wealth while living in the Philippines, has pleased Duterte by volunteering to pay for a new internment camp for thousands of drug users who have surrendered to police rather than fall victim to the slaughter.

While Duterte is currently riding high in public opinion polls, signs of a backlash are already starting to emerge. A notable indicator came last week when respected elder statesman and ex-President Fidel Ramos — whom Duterte has said would be a special envoy to China — publically expressed deep concerns about where the new Philippine leader is headed. Ramos lamented that “Team Philippines” is losing, “and losing badly.” Also last week, Supreme Court Justice Antonio Carpio even felt it necessary to remind Duterte that to surrender Philippine sovereign rights would be an “impeachable offense.”

Indeed, if Duterte continues on his current course — downplaying the legally binding decision of the Hague tribunal and watering down his own country’s territorial claims — his honeymoon with voters could end quickly. The Philippines remains one of the most pro-American countries in the world; in one recent survey, a whopping 92 percent of the population held positive attitudes towards the U.S. And some of the most pro-American Filipinos are to be found in the military, which looks to the American security relationship to counter Chinese bullying — which might help to explain why Duterte has been busily showering top officers with favors and cash.

In the photo, Chinese police officers block the road leading to the Philippine embassy in Beijing on July 13, the day after the Hague tribunal ruling.